The extent to which the available supply of labour is utilised is an important social and economic issue. The number of unemployed people and the unemployment rate are well known measures of labour underutilisation. In addition to information about unemployment, the ABS provides a wide range of data on available labour resources and the extent of their utilisation. These include data on persons with a marginal attachment to the labour force (in particular, discouraged jobseekers) and persons who are underemployed.

The ABS has developed a series of supplementary measures of labour underutilisation which were formed by grouping information on unemployed persons with that of other groups within the labour market whose labour is underutilised. Table 6.38 shows four measures - the official unemployment rate, the long-term unemployment rate and two supplementary indicators. Concepts and definitions associated with the unemployment rate and the long-term unemployment rate are discussed elsewhere in this chapter.

The labour force underutilisation rate represents the underutilisation of labour withinthe labour force. This is the sum of the number of persons unemployed and those in underemployment, expressed as a proportion of the labour force. Underemployed persons include part-time workers who want and are available to start work with more hours, and full-time workers who worked part-time hours in the reference week for economic reasons initiated by their employer. In September 2002, there were 574,300 underemployed people in the labour force. The labour force underutilisation rate (incorporating both unemployed and underemployed people) was twice the size of the unemployment rate (12% compared with 6%).

The extended labour force underutilisation rate is the broadest of the ABS measures of underutilised labour. It includes, in addition to the unemployed and underemployed, some people who are not in the labour force, but nevertheless want paid work. They may be looking for work, or share other characteristics of the unemployed, such as being available to start work. People who want to work and meet some, but not all, of the criteria used to determine unemployment in ABS labour force statistics are considered to be marginally attached to the labour force. In September 2002, there were 78,000 people with marginal attachment to the labour force who did not actively look for work for labour market reasons (i.e. were discouraged jobseekers). There were also 43,900 people with marginal attachment to the labour force who were actively looking for work and, while available to start work within four weeks, were not available to start within the survey reference week. The extended labour force underutilisation rate, which combines these 121,900 people together with the unemployed and underemployed, was 13% in September 2002.

6.38 LABOUR UNDERUTILISATION - September 2002

Units

Males

Females

Persons

Unemployed

'000

355.5

273.0

628.5

Long-term unemployed

'000

89.5

50.6

140.1

Underemployed

'000

240.3

334.0

574.3

Marginally attached to the labour force(a)

Actively looking for work, not available in reference
week but available to start work within four weeks

'000

20.9

23.0

43.9

Discouraged jobseekers

'000

24.4

53.6

78.0

Labour underutilisation rates

Long-term unemployment rate(b)

%

1.6

1.1

1.4

Unemployment rate(c)

%

6.3

6.1

6.2

Labour force underutilisation rate(d)

%

10.6

13.6

11.9

Extended labour force underutilisation rate(e)

%

11.4

15.0

13.0

(a) In this table, marginal attachment to the labour force includes only a subset of the groups usually included.(b) The long-term unemployment rate is the long-term unemployed (persons unemployed for 12 months or more) expressed as a proportion of the labour force.(c) The unemployment rate is the unemployed expressed as a proportion of the labour force.(d) The labour force underutilisation rate is the unemployed, plus the underemployed, expressed as a proportion of the labour force.(e) The extended labour force underutilisation rate is the unemployed, plus the underemployed, plus a subset of persons marginally attached to the labour force, expressed as a proportion of the labour force augmented by the marginally attached persons.

Source: Australian Labour Market Statistics, July 2003 (6105.0).

Differences in labour underutilisation between states and territories are primarily driven by differences in unemployment rates. In September 2002, Tasmania (16.3%), Queensland (13.2%), South Australia (12.4%) and Western Australia (12.2%) all had labour force underutilisation rates above the national average (11.9%) (table 6.39).

6.39 LABOUR UNDERUTILISATION, By states and territories - September 2002

Long-term
unemployment rate(a)

Unemployment
rate(b)

Labour force
underutilisation rate(c)

Extended labour force underutilisation rate(d)

%

%

%

%

New South Wales

1.5

6.0

11.7

12.7

Victoria

1.3

6.0

11.1

12.2

Queensland

1.2

6.9

13.2

14.4

South Australia

1.8

6.4

12.4

13.6

Western Australia

1.1

6.3

12.2

13.2

Tasmania

3.1

9.3

16.3

17.8

Northern Territory

0.2

4.0

7.0

7.9

Australian Capital Territory

0.9

4.0

7.9

8.9

Australia

1.4

6.2

11.9

13.0

(a) The long-term unemployment rate is the long-term unemployed (persons unemployed for 12 months or more) expressed as a proportion of the labour force.(b) The unemployment rate is the unemployed expressed as a proportion of the labour force.(c) The labour force underutilisation rate is the unemployed, plus the underemployed, expressed as a proportion of the labour force.(d) The extended labour force underutilisation rate is the unemployed, plus the underemployed, plus a subset of persons marginally attached to the labour force, expressed as a proportion of the labour force augmented by the marginally attached persons.

Source: Australian Labour Market Statistics, July 2003 (6105.0).

Volume measures of labour force underutilisation

Labour underutilisation can also be measured in terms of the number of hours (or 'volume') of labour that is underutilised. Such measures may be more relevant for analysing the spare capacity of the labour force than measures based on the number of people whose labour is underutilised. The volume of underutilised labour in the labour force is derived as the number of hours of work sought by unemployed persons plus the number of additional hours of work offered by underemployed workers. The volume labour force underutilisation rate is the ratio of the total volume of underutilised labour in the labour force to the total volume of utilised and underutilised labour in the labour force.

Table 6.40 shows experimental volume measures of labour force underutilisation for September 2002. Separate rates relating to the volume of unemployment and the volume of underemployment can also be calculated from the way the volume labour force underutilisation rate is derived. For all three underutilisation measures (i.e. unemployment, underemployment and labour force underutilisation), the experimental volume rates were lower than the corresponding headcount rates.

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